<PAGE>

                            AMENDED AND RESTATED BYLAWS
                                          
                                         OF
                                          
                               ARCADIA FINANCIAL LTD.
                                          
                                          
                                     ARTICLE 1
                              OFFICES, CORPORATE SEAL
                                          

     Section 1.1    REGISTERED AND OTHER OFFICES.  The registered office of 
the Corporation in Minnesota shall be that set forth in the Articles of 
Incorporation or in the most recent amendment of the Articles of 
Incorporation or statement of the Board of Directors filed with the Secretary 
of State of Minnesota changing the registered office in the manner prescribed 
by law.  The Corporation may have such other offices, within or without the 
State of Minnesota, as the Board of Directors shall, from time to time, 
determine.

     Section 1.2    CORPORATE SEAL.  If so directed by the Board of Directors 
by resolution, the Corporation may use a corporate seal.  The failure to use 
such seal, however, shall not affect the validity of any documents executed 
on behalf of the Corporation.  The seal need only include the word "seal", 
but it may also include, at the discretion of the Board, such additional 
wording as is permitted by law.

     Section 1.3    ARTICLES OF INCORPORATION.  In the event of any conflict 
or inconsistency between these Bylaws, or any amendment thereto, and the 
Articles of Incorporation or any amendment thereto, whenever adopted, the 
Articles of Incorporation shall govern.

                                     ARTICLE 2
                              MEETINGS OF SHAREHOLDERS

     Section 2.1    TIME AND PLACE OF MEETINGS.  Regular or special meetings 
of the shareholders, if any, shall be held on the date and at the time and 
place fixed by the Chief Executive Officer, the Chairman of the Board, or the 
Board, except that a regular or special meeting called by, or at the demand 
of a shareholder or shareholders, pursuant to Minnesota Statutes, Section 
302A.431, Subd. 2, shall be held in the county where the principal executive 
office is located.

     Section 2.2    REGULAR MEETINGS.  At any regular meeting of the 
shareholders, there shall be an election of qualified successors for 
directors who serve for an indefinite term or whose terms have expired or are 
due to expire within six months after the date of the meeting.  Any business 
appropriate for action by the shareholders may be transacted at a regular 
meeting.  No meeting shall be considered a regular meeting unless 
specifically designated as such in the notice of meeting or unless all the 
shareholders are present in person or by proxy and none of them objects to 
such designation. Regular meetings may be held no more frequently than once 
per year.

                                                                Page 1 of 1

<PAGE>

     Section 2.3    DEMAND BY SHAREHOLDERS.  Regular or special meetings may 
be demanded by a shareholder or shareholders, pursuant to the provisions of 
Minnesota Statutes, Sections 302A.431, Subd. 2, and 302A.433, Subd. 2, 
respectively.  If a regular meeting of shareholders has not been held during 
the immediately preceding fifteen (15) months, a shareholder or shareholders 
holding three (3) percent or more of the voting power of all shares entitled 
to vote may demand a regular meeting of shareholders by written notice of 
demand given to the Chief Executive Officer or the Chief Financial Officer of 
the Corporation. A shareholder or shareholders holding ten (10) percent or 
more of the voting power of all shares entitled to vote may demand a special 
meeting of shareholders by written notice of demand given to the Chief 
Executive Officer or Chief Financial Officer of the Corporation and 
containing the purposes of the meeting except that a special meeting for the 
purpose of considering any action to directly or indirectly facilitate or 
effect a business combination, including any action to change or otherwise 
affect the composition of the Board of Directors for that purpose, must be 
called by twenty-five (25) percent or more of the voting power of all shares 
entitled to vote.  Within thirty (30) days after receipt of the demand by one 
of those officers, the Board shall cause a special meeting of shareholders to 
be called and held on notice no later than ninety (90) days after receipt of 
the demand, all at the expense of the Corporation.  If the Board fails to 
cause a special meeting to be called and held as required by this 
subdivision, the shareholder or shareholders making the demand may call the 
meeting by giving notice as required by Minnesota Statutes, Section 302A.435, 
all at the expense of the Corporation.  The business transacted at a special 
meeting is limited to the purposes stated in the notice of the meeting.  Any 
business transacted at a special meeting that is not included in those stated 
purposes is voidable by or on behalf of the Corporation, unless all of the 
shareholders have waived notice of the meeting in accordance with Minnesota 
Statutes, Section 302A.435.

     Section 2.4    QUORUM; ADJOURNED MEETINGS.  The holders of a majority of 
the voting power of the shares entitled to vote at a meeting constitute a 
quorum for the transaction of business; said holders may be present at the 
meeting either in person or by proxy.  If a quorum is present when a duly 
called or held meeting is convened, the shareholders present may continue to 
transact business until adjournment, even though withdrawal of shareholders 
originally present leaves less than the proportion or number otherwise 
required for a quorum.  If the adjourned meeting is to be held not more than 
120 days after the date fixed for the original meeting, a meeting may be 
adjourned from time to time without notice, other than announcement at the 
meeting of the date, time and place of the adjourned meeting.  At adjourned 
meetings at which a quorum is present in person or by proxy, any business 
which could have been transacted at the meeting as originally noticed may be 
transacted .

     Section 2.5    VOTING.  At each meeting of the shareholders, every 
shareholder having the right to vote shall be entitled to vote either in 
person or by proxy.  Unless otherwise provided by the Articles of 
Incorporation or a resolution of the Board of Directors filed with the 
Secretary of State, each shareholder shall have one vote for each share held. 
Upon demand of any shareholder, the vote upon any question before the meeting 
shall be by ballot.
                                                                Page 2 of 1

<PAGE>

     Section 2.6    NOTICE OF MEETINGS.  Notice of all meetings of 
shareholders shall be given to every holder of voting shares, except where 
the meeting is an adjourned meeting to be held not more than 120 days after 
the date fixed for the original meeting and the date, time and place of the 
adjourned meeting were announced at the time of adjournment.  Notice of 
regular meetings of shareholders shall be given at least ten (10), but not 
more than sixty (60) days before the date of the meeting.  Notice of special 
meetings of shareholders may be given upon not less than ten (10) nor more 
than sixty (60) days, except that written notice of meeting at which an 
agreement of merger or exchange is to be considered shall be given to all 
shareholders, whether entitled to vote or not, at least fourteen (14) days 
prior thereto.  Every notice of any special meeting shall state the purpose 
or purposes for which the meeting has been called, and the business 
transacted at all special meetings shall be confined to the purpose stated in 
the call, unless all of the shareholders are present in person or by proxy 
and none of them objects to consideration of a particular item of business.

     Section 2.7    WAIVER OF NOTICE.  A shareholder may waive notice of any 
meeting of shareholders.  A waiver of notice by a shareholder entitled to 
notice is effective whether given before, at or after the meeting and whether 
given in writing, orally or by attendance.

     Section 2.8  NOTICE OF SHAREHOLDER BUSINESS

     (A)  REGULAR MEETINGS OF SHAREHOLDERS.

          (1)  The proposal of business, except nominations of persons for
     election to the Board of Directors of the Corporation, to be considered by
     the shareholders at a regular meeting of shareholders may be made by any
     shareholder of the Corporation who is entitled to vote at the meeting and
     who complies with the notice procedures set forth in clause (2) of this
     paragraph (A) of this Bylaw and who was a shareholder of record at the time
     such notice is delivered to the Secretary of the Corporation.
     
          (2)  For business, except nominations of persons for election to the
     Board of Directors of the Corporation, to be properly brought before a
     regular meeting by shareholder pursuant to Paragraph (A) (1) of this Bylaw
     the shareholder must have given timely notice thereof in writing to the
     Secretary of the Corporation.  To be timely, a shareholder's notice shall
     be delivered to the Secretary at the principal executive office of the
     Corporation not less than one hundred twenty (120) days prior to the first
     anniversary of the date that the Corporation first released or mailed its
     proxy statement to shareholders in connection with the preceding year's
     annual meeting; provided, however, that in the event that the date of the
     annual meeting is advanced by more than thirty (30) days or delayed by more
     than sixty (60) days from the anniversary of the preceding year's annual
     meeting date, notice by the shareholder to be timely must be so delivered
     not later than the close of business on the later of the one hundred
     twentieth (120th) day prior to such annual meeting or the tenth (10th) day
     following the day on which public announcement of the date of such meeting
     is first made.  Such shareholder's notice shall set forth (a) as to any
     business, except for nominations of persons for election to the 

                                                                Page 3 of 1

<PAGE>

     Board of Directors of the Corporation, that the stockholder proposes to
     bring before the meeting, a brief description of the business desired to 
     be brought before the meeting, the reasons for conducting such business 
     at the meeting and any material interest in such business of such 
     shareholder and the beneficial owner, if any, on whose behalf the proposal
     is made and (b) as to the shareholder giving the notice and the beneficial
     owner, if any, on whose behalf the nomination or proposal is made (i) the
     name and address of such shareholder, as they appear on the Corporation's
     books, and of such beneficial owner and (ii) the class and number of shares
     of the Corporation which are owned beneficially and of record by such 
     shareholder and such beneficial owner.
     
     (B)  SPECIAL MEETINGS OF SHAREHOLDERS.  Only such business shall be 
conducted at a special meeting of shareholders as shall have been brought 
before the meeting pursuant to the Corporation's notice of meeting pursuant 
to Section 2.6 of these Bylaws.

     (C)  GENERAL.

          (1)  Only such business shall be conducted at a meeting of
     shareholders as shall have been brought before the meeting in accordance
     with the procedures set forth in this Bylaw.  Except as otherwise provided
     by law, the Articles of Incorporation or these Bylaws, the chairman of the
     meeting shall have the power and duty to determine whether any business
     proposed to be brought before the meeting was made in accordance with the
     procedures set forth in this Bylaw, and, if any proposed business is not in
     compliance with this Bylaw, to declare that such defective proposal shall
     be disregarded.

          (2)  For purposes of this Bylaw, "public announcement" shall mean
     disclosure in a press release reported by the Dow Jones News Service,
     Associated Press or comparable national news service or in a document
     publicly filed by the Corporation with the Securities and Exchange
     Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
     
     Section 2.9    AUTHORIZATION WITHOUT A MEETING.  Any action required or 
permitted to be taken at a meeting of the shareholders may be taken without a 
meeting as authorized by law.

     Section 2.10   RECORD DATE.  The Board of Directors may fix a time, not 
exceeding sixty (60) days preceding the date of any meeting of shareholders, 
as a record date for the determination of the shareholders entitled to notice 
of and to vote at such meeting, notwithstanding any transfer of shares on the 
books of the Corporation after any record date so fixed.  The Board of 
Directors may close the books of the Corporation against the transfer of 
shares during the whole or any part of such period.  If the Board of 
Directors fails to fix a record date for the determination of the 
shareholders entitled to notice of and to vote at any meeting of the 
shareholders, the record date shall be the twentieth (20th) day preceding the 
date of such meeting. 

                                                                Page 4 of 1

<PAGE>

                              ARTICLE 3
                              DIRECTORS

     Section 3.1    GENERAL.  The business and affairs of the Corporation 
shall be managed by or shall be under the direction of the Board of Directors.

     Section 3.2    NUMBER, QUALIFICATION AND TERM OF OFFICE.  The Board of 
Directors shall consist of no fewer than five persons and no more than eleven 
persons.  The Board of Directors may determine from time to time the number 
of directors within that range.  The Board of Directors may increase or 
decrease the number of directors by an affirmative vote of the majority of 
the directors then serving; provided however, any such decrease in the number 
of directors shall not affect the term of any incumbent director.  Each of 
the directors shall hold office until the regular meeting of the shareholders 
next held after his or her election, until his or her successor shall have 
been elected and shall qualify, or until he or she resigns or is removed as 
hereinafter provided. No person (other than a person nominated by or on 
behalf of the Board of Directors) shall be eligible for election as a 
director at any annual or special meeting of shareholders unless a written 
request that his or her name be placed in nomination together with the 
written consent of such person to serve as director was received from a 
shareholder of record by the secretary of the Corporation not less than one 
hundred twenty (120) days prior to the date fixed for the meeting.

     Section 3.3    BOARD MEETINGS; PLACE AND NOTICE.  Meetings of the Board 
of Directors may be held from time to time at any place within or without the 
State of Minnesota that the Board of Directors may designate.  In the absence 
of designation by the Board of Directors, Board meetings shall be held at the 
principal executive office of the Corporation, except as may be otherwise 
unanimously agreed orally or in writing or by attendance,  Special or regular 
meetings of the Board of Directors may be called by the Chairman of the 
Board, the Chief Executive Officer, or the Chief Financial Officer, upon not 
less than twenty-four (24) hours notice.  Any director may call a Board 
meeting by giving not less than five (5) business days notice to all 
directors of the date and time of the meeting.  The notice need not state the 
purpose of the meeting. Notice may be given by mail, telephone, telegram, 
telecopy or by personal service.  If the meeting schedule is adopted by the 
Board, or if the date and time of a Board meeting has been announced at a 
previous meeting, no notice is required.

     Section 3.4    WAIVER OF NOTICE.  A director may waive notice of a 
meeting of the Board.  A waiver of notice by a director is effective, whether 
given before, at or after the meeting and whether given in writing, orally or 
by attendance.

     Section 3.5    QUORUM.  A majority of the directors currently holding 
office is a quorum for the transaction of business.

     Section 3.6    VACANCIES.  Vacancies on the Board resulting from the 
death, resignation or removal of a director, or by an increase in the number 
of directors, may be filled by the 


                                                                Page 5 of 1

<PAGE>

affirmative vote of a majority of the remaining directors, even though less 
than a quorum.  Each director elected under this Section to fill a vacancy 
holds office until a qualified successor is elected by the shareholders at 
the next regular or special meeting of the shareholders.

     Section 3.7    COMMITTEES.  The Board may by resolution establish 
committees in the manner provided by law.  Committee members need not be 
directors.  The following committees, if established by the Board, shall have 
the responsibilities set forth respectively, subject to enlargement or 
restriction of such responsibilities, as the Board, by resolutions, shall 
determine:

     a.   AUDIT COMMITTEE

          *Recommending the appointment of independent auditors.
          *Consulting with the independent auditors on the plan of the auditors.
          *Reviewing, in consultation with the independent auditors, their
          report of audit or proposed report of audit and the accompanying
          management letter.
          *Consulting with the independent auditors on the adequacy of internal
          controls.
          
     b.   COMPENSATION COMMITTEE
          
          *Strategically, considers how the achievement of the overall goals and
          objectives of the Corporation can be aided through adoption of an
          appropriate compensation philosophy and effective compensation program
          elements.
          *Administratively, reviews salary progression, bonus allocations,
          stock awards and the awards of supplemental benefits and perquisites
          for key executives against the compensation objectives of the
          Corporation and its overall performance.
          *Approves the compensation arrangements for the Corporation's senior
          management; also reviews and approves the adoption of any compensation
          plans in which officers and directors are eligible to participate.

                                                                Page 6 of 1

<PAGE>


     Section 3.8    ABSENT DIRECTORS.  A director may give advance written 
consent or opposition to a proposal to be acted on at a Board meeting.  If 
the director is not present at the meeting, consent or opposition to a 
proposal does not constitute presence for purposes of determining the 
existence of a quorum, but consent or opposition shall be counted as a vote 
in favor of, or against, the proposal and shall be entered in the minutes or 
other record of action of the meeting if the proposal acted on at the meeting 
is substantially the same or has substantially the same effect as the 
proposal to which the director has consented or objected.

     Section 3.9    WRITTEN ACTION BY BOARD.  An action required or permitted 
to be taken by the Board of Directors of this Corporation may be taken by 
written action signed by the number of directors that would be required to 
take the same action at a meeting of the Board at which all directors are 
present except as to those matters which require shareholder approval, in 
which case the written action must be signed by all members of the Board of 
Directors.

                                                                Page 7 of 1

<PAGE>


                                ARTICLE 4
                                OFFICERS

     Section 4.1    NUMBER.  The officers of the Corporation shall consist of 
a Chief Executive Officer and a Chief Financial Officer.  The term "Chief 
Executive Officer," as such term is used herein, shall include an individual 
who has all the authority, rights and powers as would ordinarily reside in a 
Chief Executive Officer of the Company (an "Acting Chief Executive Officer"). 
The Chairman of the Board shall preside at all meetings of the shareholders 
and directors and shall have such other duties as may be prescribed from time 
to time by the Board of Directors.  The Chief Executive Officer shall see 
that all orders and resolutions of the Board are carried into effect.  The 
Chief Executive Officer and Chief Financial Officer shall have such other 
duties as are prescribed by statute.  The Board may elect or appoint any 
other officers it deems necessary for the operation and management of the 
Corporation, each of who shall have the powers, rights, duties, 
responsibilities and terms of office determined by the Board from time to 
time.  Any number of offices or functions of those offices may be held or 
exercised by the same person.  If specific persons have not been elected as 
President or Secretary, the Chief Executive Officer may execute instruments 
or documents in those capacities.  If a specific person has not been elected 
to office of Treasurer, the Chief Financial Officer of the Corporation may 
sign instruments or documents in that capacity.

     Section 4.2    VICE CHAIRMAN AND VICE PRESIDENT.  Each Vice Chairman and 
Vice President, if one or more are elected, shall have such powers and shall 
perform such duties as may be specified in the Bylaws or prescribed by the 
Board of Directors or by the Chairman of the Board or by the Chief Executive 
Officer.  

     Section 4.3    SECRETARY.  The Secretary, if one is elected, shall be 
secretary of and shall attend all meetings of the shareholders and Board of 
Directors and shall record all proceedings of such meetings in the minute 
book of the Corporation.  He shall give proper notice of meetings of 
shareholders and directors.  He shall perform such other duties as may, from 
time to time, be prescribed by the Board of Directors, by the Chairman of the 
Board, or by the Chief Executive Officer.

     Section 4.4    ELECTION AND TERM OF OFFICE.  The Board of Directors 
shall from time to time elect a Chairman of the Board of Directors, Chief 
Executive Officer and Chief Financial Officer and any other officers or 
agents the Board deems necessary.  Such officers shall hold office until they 
are removed or their successors are elected and qualified.

     Section 4.5    DELEGATION OF AUTHORITY.  An officer elected or appointed 
by the Board may delegate some or all of the duties or powers of his office 
to other persons, provided that such delegation is in writing.

     Section 4.6    COMPENSATION OF OFFICERS.  An officer shall be entitled 
only to such compensation as shall be established by written contract or 
agreement duly approved by or on behalf of the Corporation, or established or 
approved by resolution of the Board of Directors.  


                                                                Page 8 of 1

<PAGE>

Absent such written contract, agreement or resolution of the Board of 
Directors, no officer shall have a cause of action against the Corporation to 
recover any amount due or alleged to be due as compensation for services in 
his or her capacity as an officer of the Corporation.

                                  ARTICLE 5
                         SHARES AND THEIR TRANSFER

     Section 5.1    CERTIFICATE OF SHARES.  Every shareholder of this 
Corporation shall be entitled to a certificate, to be in such form as 
prescribed by law and adopted by the Board of Directors, certifying the 
number of shares of the Corporation owned by him.  The certificates shall be 
numbered in the order in which they are issued and shall be signed by the 
Chief Executive Officer and Secretary of the Corporation; provided, however, 
that when the certificate is signed by a transfer agent or registrar, the 
signatures of any of such officers upon the certificate may be facsimiles, 
engraved or printed thereon, if authorized by the Board of Directors.  Such 
certificate shall also have typed or printed thereon such legend as may be 
required by any shareholder control agreement.  Every certificate surrendered 
to the Corporation for exchange or transfer shall be canceled, and no new 
certificate or certificates shall be issued in exchange for any existing 
certificate until such existing certificate shall have been so canceled.

     Section 5.2    TRANSFER OF SHARES.  Transfer of shares on the books of 
the Corporation may be authorized only by the shareholder named in the 
certificate, or the shareholder's legal representative, or the shareholder's 
duly authorized attorney in fact, and upon surrender of the certificate or 
the certificates for such shares.  The Corporation may treat, as the absolute 
owner of shares of the Corporation, the person or persons in whose name or 
names the shares are registered on the books of the Corporation.

     Section 5.3    LOST CERTIFICATES.  Any shareholder claiming that a 
certificate for shares has been lost, destroyed or stolen shall make an 
affidavit of that fact in such form as the Board of Directors shall require 
and shall, if the Board of Directors so requires, give the Corporation a 
sufficient indemnity bond, in form, in an amount, and with one or more 
sureties satisfactory to the Board of Directors, to indemnify the Corporation 
against any claims which may be made against it on account of the reissue of 
such certificate.  A new certificate shall then be issued to said shareholder 
for the same number of shares as the one alleged to have been destroyed, lost 
or stolen.

                                ARTICLE 6
                             INDEMNIFICATION

     Section 6.1    INDEMNIFICATION.  The Corporation shall indemnify, in 
accordance with the terms and conditions of Minnesota Statutes, Section 
302A.521, the following persons:  (a) officers and former officers; (b) 
directors and former directors; (c) members and former members of committees 
appointed or designated by the Board of Directors; and (d) employees and 
former employees of the Corporation.  The Corporation shall not be obligated 
to indemnify any other person or entity, except to the extent such obligation 
shall be specifically approved by resolution of the Board of Directors.  This 
Section 6.1 is for the sole and exclusive benefit of the persons 

                                                                Page 9 of 1

<PAGE>


designated herein and no person, firm or entity shall have any rights under 
this Section by way of assignment, subrogation or otherwise and whether 
voluntarily, involuntarily or by operation of law.

                                ARTICLE 7
                              MISCELLANEOUS

     Section 7.1    GENDER REFERENCES.  All referenced in these Bylaws to a 
party in the masculine shall include the feminine and neuter.

     Section 7.2    PLURALS.  All references in the plural shall, where 
appropriate, include the singular and all references in the singular shall, 
where appropriate, be deemed to include the plural.

                             CERTIFICATION
                                          
     I, James D. Atkinson III, do hereby certify that I am the duly elected, 
qualified or acting Secretary of Arcadia Financial Ltd., a corporation 
organized under the laws of the State of Minnesota, and that the foregoing is 
a true and correct copy of the Bylaws as of             , 1998.

          
                                           James D. Atkinson III
                                           Secretary

                                                                Page 10 of 1